FTC approves Internet ad privacy plan

But says legislation still needed to protect consumers

By

WilliamL. Watts

WASHINGTON (CBS.MW) -- Federal officials have approved a plan developed by Internet advertising firms to regulate how the industry collects information from Web users.

The self-regulatory plan, developed by the Network Advertising Initiative, a consortium comprising more than 90 percent of Internet ad firms, requires companies to detail their data collection policies and give consumers the opportunity to opt out of those collection efforts.

“NAI played a valuable and constructive role in developing these principles, which serve as the basis for protecting consumer privacy in this area,” said Jodie Bernstein, head of the FTC’s Bureau of Consumer Protection.

Online privacy has become a hot-button issue, generating intense public and government scrutiny of data collection practices.

The FTC’s Bernstein said she hopes the rest of the Internet industry follows the lead of the ad firms.

The commission said legislation is still required, however, to guarantee compliance by ad firms that aren’t members of the NAI. The FTC first called for online privacy legislation in a report issued earlier this year.

The agency has emerged as the primary regulator when it comes to Internet privacy matters. The FTC has opened a number of preliminary investigations into how online companies handle their privacy data and consumers have shown increasing concern over how personal data is stored and handled.

In perhaps the highest-profile case, online advertising firm DoubleClick abandoned plans that would combine personal information with the surfing activity of Web users.

Also, the agency last week settled a complaint against Toysmart, a defunct Web retailer owned largely by Disney (DIS), which had attempted to sell its customer list despite having promised customers it would never share personal data with third parties.

Under the terms of the deal, Toysmart agreed to only sell the data to an approved buyer taking over the entire Web site. The deal may not be the last word: Thirty-eight states filed legal papers on Tuesday seeking to block the settlement, arguing that the deal doesn’t go far enough to protect consumers.

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